So says the Times of London. In the article, Alex Spence details that, under pressure from the SEC, the UK government has declined to limit the exposure of auditors to damages.
Apparently, the SEC fears a 'you scratch my back' situation, where auditors issue a less than stringent report in return for an agreed restriction on auditor liability. A version of this already exists in the UK under the 2006 Companies Act, where auditor liability can be limited if shareholders approve. To date, no major UK companies have taken advantage of this provision. No doubt investors would experience a certain 'chilling effect' upon disclosure of such a deal.
Spence goes on to list the current firm-killing litigation against the Final 4:
KPMG A defendant in a class-action lawsuit in the Southern District of New York against Tremont, a Bernard Madoff feeder fund
Ernst & Young Sued by investors in a Luxembourg court with UBS for oversight of a European Madoff feeder fund
PwC Included in several lawsuits in Canada claiming damages of up to $2 billion against Fairfield Sentry, a big Madoff feeder fund
KPMG Sued in the US for at least $1 billion by creditors of New Century Financial, a failed sub-prime mortgage lender, which claimed that KPMG’s auditing was “recklessly and grossly negligent”
Deloitte Sued by the liquidators of two Bear Stearns-related hedge funds that collapsed at the start of the credit crunch
No doubt the Final 4 will be ready with their 'too big to fail' arguments should any of these appear to be headed to a finding against the firms.
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